In case you’re wondering about how you can start investing into ETFs as a European investor, this post is for you.
I’ve been investing into stocks via exchange traded funds (ETFs) for almost five years now. As of December 15th, my wife and I have a total of 150.300€ in ETFs on several brokerage accounts.
Here’s what we’re going to talk about today:
- We’ll discuss whether or not you can buy US-based ETFs as a European investor
- I’ll show you how you can quickly find the right ETF for the index you want to buy (eg. S&P 500, FTSE All World, MSCI World) and how to compare available ETFs, to make sure you choose the best one
- And lastly, I’ll show you how to actually buy ETF shares using all of my favorite European brokers. If you’re based in Austria like me or in Germany, I’ll also show you how to do that using the best local brokers.
I hope that this post, as well as the video I recorded, will help clarify some of the many questions I’ve received about these topics.
Please remember that none of this is investment advice, just my personal opinion based on my own experience as an investor.
Can You Buy US ETFs in Europe?
More often than I would like, I get someone asking me why they’re not able to buy an ETF from the US.
Now, why do many Europeans start looking for US based ETFs in the first place?
That’s likely because the whole financial independence movement is a lot larger in the US than it is in Europe, so you probably first heard about investing from an American finance blogger. I got interested as well after hearing Mr. Money Mustache on the Tim Ferriss Podcast.
Chances are, you’re then left wondering why you can’t find the ETF they mention on your European broker.
This is not the broker’s fault, it’s actually due to European regulations. As a result, we’re not able to buy ETFs that are based in the US any more.
However, in most cases we can still invest into the exact same stock market index and the same companies. We just need to find the same or a similar ETF that’s domiciled in Europe instead of the US.
Oftentimes, it may even be offered by the same provider, like Vanguard.
How to Compare and Find the Best ETFs
Let’s see how you can find the right ETF for your strategy, which you can actually invest in as a European.
I like to use JustETF for my research. It helps me find all the ETFs I’m able to invest in as a European citizen and to compare all important metrics (replication method, use of profit – distributing vs. accumulating, fund size, costs and the ETFs performance since it was launched).
Plus, it gives me the information I need to buy the ETF using my broker, namely the ISIN number or the ticker symbol.
How To Buy ETFs as a European Investor
Let’s assume you have found the perfect ETF for your investment strategy and thanks to JustETF, you also have the ISIN number or ticker symbol to buy it. But, you still need a reliable brokerage account to start investing.
My two favorite brokers for investors from all across Europe are Interactive Brokers (especially since they removed inactivity fees in July) and Degiro.
Both of them are highly reliable, strictly regulated and they’ve been around for a while and didn’t just jump out of nowhere as an app. But most importantly, they have extremely low fees for buying and selling ETFs.
As a rule of thumb, you never want to waste money on unnecessary fees, so you have more money left over to invest instead.
Note: I also mention Trade Republic later in the article, which was previously only available in Germany and Austria, but has recently expanded to France, Spain and Italy as well.
Let’s have a look at how you actually buy ETFs using different brokers, starting with Degiro.
Generally speaking, it’s best to place orders between 9 AM and 6 PM CET, as that’s when the largest European exchanges are open.
Degiro
Via Degiro Zero, Degiro offers a total of 200 ETFs which can be purchased commission-free (make sure you read all the conditions). Definitely make sure you check the list on the website before placing an order, as it could help you save some money.
Luckily for me, this list also includes the one ETF my wife and I buy on a monthly basis, the accumulating Vanguard FTSE All-World (ISIN: IE00BK5BQT80, Ticker: VWCE). It enables us to invest into over 3.700 companies from all over the world. All via a single, low-cost ETF.
Interactive Brokers (Tiered or Fixed Pricing?)
Interactive Brokers has two pricing models, tiered and fixed.
I found an older sheets document online, comparing the two pricing structures. I tried my best to update it, now that Interactive Brokers lowered some of its fees even further:
According to my calculations, for orders up to 4.627€ each, fees should be lower using the tiered pricing model, after which the fixed pricing model starts being cheaper.
You can switch between the two pricing models in your Interactive Brokers account under account settings – IBKR pricing plan.
And here’s how you actually place an order on IB:
Interactive Brokers is not that complicated once you get the hang of it, but the interface is clearly more tailored towards professional investors and can be quite overwhelming when you start out.
ETF Investing from Austria and Germany
Now, if you’re based in Austria or in Germany, where taxes are more complicated, I recommend choosing a local broker for most of your investments. These take care of taxation for you, making your life a lot easier.
Flatex – The Best (Only?) Choice in Austria
If like me you’re from Austria, the best low-cost option by far is Flatex. They take care of any taxes for you, there are no account fees and they offer ETF saving plans.
A saving plan (“Sparplan” in German) allows you to buy specific ETFs on a monthly basis with either zero fees or only paying 1,5€ in fees for other ETFs, like the Vanguard FTSE All-World.
My wife and I have a monthly savings plan running here at the beginning of every month.
Ok, that’s it for Flatex.
If you’re based in Germany, consider yourself lucky as you have some fantastic local options. I like using these as well because of what they offer, but sadly they only take care of taxes for German residents.
Smartbroker
Smartbroker is my personal favorite German broker. What makes this one special, is that you can buy any stock or ETF free of charge as long as you buy 500€ or more of it using the Gettex exchange. They don’t charge any account fees either.
Scalable Capital
My second favorite German broker is Scalable Capital.
Using the Gettex exchange, ETFs from iShares, Invesco and Xtrackers can be purchased without any fees, while other ETFs and stocks only cost 0,99€ in order fees. But where they stand out is with their saving plans for stocks & ETFs, which are completely commission free!
There are no account fees on Scalable Capital via the Free Broker model, which is what I use.
Interestingly, while the registration and the web-login are all in German, you can actually have the mobile app running in English. So if you’re not a German native speaker, it might be easier for your to use the broker via app.
Trade Republic
The third and last German broker I want to mention is Trade Republic. They offer thousands of stocks and ETFs which can be purchased for only 1€ in fees per order, you can buy partial shares, they have free saving plans and no account fees.
Trade Republic currently seems to be expanding to other countries beyond Germany and Austria, with investors from France and Spain being able to use the broker as well.
Alright, that was the last broker I wanted to mention.
In case you’ve been struggling with how to actually buy ETFs as an investor in Europe or more specifically Austria and Germany, I hope that this post and my video guides helped you out.
If it did, I’d love to know in the comments. Also, feel free to drop any other questions you might have regarding my choice of brokers!
ETF Investing for Europeans in 2022 (Video)
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Hello Angelo,
I opened an account in flatex and transferred some funds to start a EFT savings plan, but it looks like there is a exit cost of 5.9%. D you know what this is about?
In the example in their site, it says for a holding of 3 years, it’s paid 1,5 euros in first year + expense ratio, the second year only expense ratio and last year expense ratio + 5.9% exit cost. Is this exit cost percentage over all 3 years amount, only last year amount or only last deposit?
Sorry to bother you, I’m resident in Austria and still don’t know good german. Using flatex would really help with the taxes but if the costs are gonna be that much, I rather use Degiro, since I’ll already have to pay an accountant or do it myself for other brokers and invested assets.
Hi Augusto,
There are no holding or special exit costs. All the fees you have are 1,5€ whenever your Sparplan is executed (each purchase) and the 0,2% per year or so internally within the ETF (TER – total expense ratio). You never actually see the TER being deducted, it’s part of the ETF’s performance.
The only other fees you have is if you decide to sell shares, then for example you pay 5,90€ in fees to Flatex, depending on the amount you’re selling.
By law they’re required to show some sample fee calculations for each ETF, but they’re sadly a lot more confusing than helpful 😅
Hi, First of all thank you for writing these blogs. They are very informative specially for someone new like me.
I saw you mentioned you have more from distributing to accumulating. How did you do that? Does vanguard provide some kind of provision for moving funds like that?
Hi Gaurav,
Thank you! No, I simply changed my new, monthly investments to the accumulating ETF version in January 2021. There’s no way to transfer shares between the distributing and accumulating version, you would have to sell the old shares – thus creating a taxable event if you’re in profit, which is why I never sold any of my existing distributing ETF shares.
Hi Angelo
Sorry I am a bit new to the investment world but can’t I access ETFs from platforms like eToro ?
I am using eToro and the Vanguard FTSE ETF that you mention is there and tradeable and dont seem to have any kind of fees attached (apart from a spread in the buying and selling)
What am I doing wrong ?
Best wishes!
Here are few reasons (if my memory regarding eToro is correct) why I would choose IBKR instead. eToro comes with these downsides:
– You can’t transfer your shares to another broker (an important feature!), you’re forced to sell them instead. What if conditions get worse and you want to move somewhere else? Now you have to sell the shares, fully tax your profits in your home country and then you’re left with less money to invest.
– $5 Withdrawal fees
– Constant conversion fees, since your account is in USD
– Most likely much higher spreads when buying & swelling -> so you’re paying a lot more in hidden fees. You’re much better paying 1,25€ or so for a 2.000€ order on Interactive Brokers in fees and getting the best market price for your orders.
– $10/month inactivity fee on eToro if you’re inactive for a while
Just some of the things to consider.
Thanx for your insight!
Yeah i though about the in(possibility) of transferring the portfolio and also being an european it doesn’t make a lot of sense for me to trade in dollars. I chose eToro mostly because they didn’t scare me with transaction fees but maybe I really need to do a better research
Thank you for your time for punting up this great blog and to reply to our questions!
Hello Angelo,
Thank you for your great insights.
I’m very new to Degiro and to ETF, and I’m wondering what’s the best way to set-up a monthly investment plan: do you purchase shares in the same ETF every month? Or a different ETF every month?
And do you do it manually every month, or is it possible to automate the monthly purchase?
Cheers,
Valérie
Hi Valérie, my pleasure!
Sadly there are no monthly saving plans on Degiro or Interactive Brokers yet, so I buy shares manually on a monthly basis.
If you want an easier way, there is another excellent broker, which recently entered the European market (previously only Germany) – Trade Republic. They offer free saving plans into ETFs (incl. the FTSE All-World since a few months), even buying partial shares with the exact amount you want to invest. We actually set up a small ETF savings plan for our newborn daughter there last month 🙂
If you’re based in one of these European countries it could be a great, inexpensive alternative to get you started.
Cheers,
Angelo
Hello Angelo
Thank you for very helpful blog and youtube videos. I am very new to investing, and currently living in Germany and trying to choose a broker for a Savings Plan only. I have a question – have you looked at Vanguard’s website itself?https://www.de.vanguard/de/anlegen-sparen/direkt. Please can you tell me a quick summary of the costs for Vanguard compared to Scalable Capital or Trade Republic? I am struggling to understand which is cheaper for Savings plans.
Hi Noah, you’re very welcome! I have, but sadly that’s only available for Germany, not Austria (where I’m based). For savings plans it could be a good choice, as those are offered without fees (like on Trade Republic or Scalable). The only downside is that fees for direct orders are quite high at 7€, while those cost only 1€ on Trade Republic or Scalable.
There are fund fees (0.1%) on their website which I don’t understand. Also, do you know if there are any other hidden costs or annual account management fees for Vanguard? Does Vanguard allow to trade for multiple exchange or only one like Trade Republic?
Sorry for a lot of question!
With fund fees they mean the TER (total expense ratio) of the ETFs themselves, meaning the costs of the ETF internally, which you never see. But many Vanguard ETFs actually have a tracking difference that’s close to 0 or even negative, meaning they perform just as well or better than the index they’re replicating, even after fees. As far as I can see, they also use just one exchange – Xetra.
Thanks for your reply.
So, overall, am I correct that fee/cost will be lower with Vanguard compared to Trade republic / Scalable Capital? Would you recommend Vanguard for Saving plans use?
Sure! No, savings plans are free as well on both Trade Republic and Scalable, while direct orders are about 1€ on each broker otherwise (vs. 7€ on Vanguard). If you’re strictly planning to set up a savings plan and you don’t mind that those are only executed at the start of the month (you have more options on the other two brokers), then Vanguard is still a worthwhile option!
Hi Angleo,
Does Trade Republic take into account Capital Gains allowed in Germany? I have heard this is around 800 Euros.
Also, if I was to move my portfolio to another broker – does this keep a record of how much cash I actually invested? Because, you’d need that record to calculate what the gains were which are to be taxed – don’t want to be taxed on the whole portfolio!
Thanks.
Yes, if you’re a German resident you have an option called “Freistellungsauftrag” in the Trade Republic app, you just have to confirm the amount you want them to take into account (eg. if you’re already using the allowance somewhere else). It was actually increased to 1.000€ for 2023 as far as I’m aware.
If you’re staying in Germany and you end up transferring shares to another German broker, your tax base (correct buying price) is transferred to the new broker.
You would only need to track it yourself if you move your shares to a broker outside of Germany (eg. Interactive Brokers in Ireland) – in IB’s case, you’re at least able to correct the buying price after making the transfer manually.